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2001-168-RES APPROVING/ADOPTING LEASE POLICY AND MASTER LEASE AGREEMENT FOR ALLFUTURE PRIVATE HANGAR LEASES AT COX FIELD AIRPORT RESOLUTION NO. 2001-168 AN RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS, APPROVING AND ADOPTING A LEASE POLICY AND MASTER LEASE AGREEMENT FOR ALL FUTURE PRIVATE HANGAR LEASES AT COX FIELD AIRPORT; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Paris did heretofore direct the City Attorney to conduct a survey of various airports around Texas to determine their various methods of operation, hangar rentals, and leasing policies, among other things; and, WHEREAS, said survey was submitted to the Airport Advisory Board for review and recommendation; and, WHEREAS, the City Council of the City of Paris did heretofore, on August 13, 2001, based on the results of said survey and the recommendations of the Airport Advisory Board, direct the Legal Department to prepare a lease policy and master lease agreement for all future private hangar leases at Cox Field Airport; and, WHEREAS, the form of the Lease Policy and Master Lease Agreement, attached hereto as Exhibit A, should, in all things, be approved and adopted; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS: Section 1. That the findings set out in the preamble to this resolution are hereby in all things approved. Section 2. That the Lease Policy and Master Lease Agreement attached hereto as Exhibit A be, and the same is hereby, approved and adopted. Section 3. That this resolution shall be effective from and after its date of passage. PASSED AND APPROVED this 4th day of October, 2001. ATTEST: APPROVED AS TO FORM: COX FIELD AIRPORT PARIS, TEXAS LEASE POLICY FOR PRIVATELY BUILT HANGARS L PURPOSE AND GOALS OF POLICY All leases for privately built hangars constructed after the effective date of this policy and located on Cox Field Airport property will be considered when the proposed use is consistent with the Airport Master Plan. It is the goal of the City of Paris to encourage high quality development, continued maintenance and enhancement of facilities, and balanced uses of the Airport including a diversity of based aircraft and businesses. This policy will help insure the Airport will receive an appropriate return on the City's airport asset while providing equitable development opportunities for present and future leaseholders. This policy addresses new leases, extensions, renewals, and lease rates by: . Establishing hangar development sizes with corresponding lease terms. . Establishing uniform lease rates for Cox Field Airport. . Encouraging full property utilization and preventing land-banking. · Ensuring compliance with all State and Federal laws and grant assurances. II. ApPLICABILITY This policy is applicable to all privately built hangars constructed after the effective date of this policy and located on Cox Field Airport properties. III. INITIAL LEASE Initial leases require the submission of an application in a form specified by the City to be filed with the City Manager. Thereafter, if all prerequisites are satisfied, a Cox Field Airport Standard Ground Lease shall be prepared by the City and the appropriate support documentation shall be forwarded to the Airport Director and subsequently to the Airport Advisory Board for review to determine the viability of a proposed project and recommendation to the City Council. The lessee shall be required to carry a construction bond or proof of financial wherewithal to complete the construction of the proposed facilities. The term of the lease granted will be based on the size of facility to be constructed. There will be no options available upon the expiration of the primary term of a lease; however, then current lessees shall be given a right-of-first-refusal upon expiration of either a ground or building lease for a new building lease upon the terms and conditions established by the City of Paris. IV. LEASES AFTER EXPIRATION OF INITIAL LEASES Tenants of hangars which are built by the Tenant as consideration for a long-term ground lease shall be given the right-of-first-refusal for the lease of such hangar upon the expiration of the initial lease. The monthly rental rate for such hangars shall be determined as set out herein. Cox Field Airport Page 1 Lease Policy ~ TERMS OF LEASES A. Background The City of Paris based this policy on recommendations of the Airport Advisory Board and the results of a study of other airports conducted by the Legal Department and presented in August 2001. The lease terms and rate termination methods have been adopted through a public vote of the City Council of the City of Paris and are herein incorporated. The term of Ground Leases on which the tenant intends to construct improvements begins at 25 years and may be negotiable depending on the size of the hangar. These terms were adopted to encourage development of the Airport and provide sufficient time for investors to amortize their investment. As a practical matter and good business for the City, Lessees and lenders have a reasonable length of time to realize an acceptable rate of return on the project prior to the potential reversion of the improvement to the City. B. Ground Lease Terms Term New Investment 25 years Less than 5,000 square feet. of new hangar, office, and shop space construction 30 years 5,001 to 20,000 square feet of new hangar, office, and shop space construction Negotiable In excess of 20,000 square feet of new hangar, office, and shop space construction All construction should contribute to furthering the City of Paris's Airport Master Plan or Airport development objectives. VI. GROUNDLEASESRATES The following is the ground lease rate to each new privately built hangar located at Cox Field Airport: $0.12 per sq. ft. per year, adjusted every five (5) years by an amount equal to the Consumer Price Index (CPI) for the previous five (5) years. All leases shall have a five (5) year CPI clause. VIL MAINTENANCE: GOOD CONDITION & REPAIR Requiring a tenant to maintain property and facilities in good condition and repair, while always important, becomes critical as end of long-term leases approaches. Securing title to leasehold Cox Field Airport Page 2 Lease Policy improvements at the expiration of a lease is of little value to the City or Airport if the improvements are not representative of Airport standards or suitable for lease to a desirable tenant at rates meeting Airport expectations. Particular attention should be focused on major cost issues such as foundations, structural components of buildings, roofs, wall systems, hangar doors, electrical systems, etc. Sheet metal roofs and walls should be maintained to be free from leaks and significant damage and should be painted as necessary to prevent and retard rusting and to enhance appearance as original finishes deteriorate. Painting, carpeting, and other similar items are typical of maintenance and lease expenses expected of tenants. Good maintenance is an annual, on-going obligation. Any level of clutter, junky or unkempt appearance will not be tolerated. VIIL ENVIRONMENTAL CONDITION OF LEASEHOLD Tenant shall conduct its operation and maintain the leasehold in such a manner as to be free of environmental contamination. IX. COMPLIANCE WITH CITY BUILDING CODE Construction of all private hangars shall be conducted in full confonnance with the City's Building Code, including the payment of all building inspection fees or other fees associated with construction. All necessary plans required for review and approval of the project shall be timely submitted. Any and all provisions of the City's Building Code applicable to hangar structures shall be complied with in full. X TIME FOR CONSTRUCTION All privately built hangars shall be constructed within eighteen (18) months of approval of a lease agreement. Failure to timely complete construction of the hangar shall be considered a breach of the lease agreement and subject the tenant to all customary remedies for such breach. XI. USE OF THE HANGAR The hangar shall be used in accordance with the City's established policy for airport purposes only and in conformance with the requirements of the City's master lease agreement. For all new lease agreements covered under this policy, no hangar shall be used as a residence or shall be used for residential purposes. However, such items as a sink, bathroom, or associated facility to allow temporary overnight stay or perhaps occasional social uses of a portion of the hangar, will be permitted. XIL TAXES The tenant shall be responsible for all taxes, if any, including ad valorem taxes or other similar taxes, which may be assessed upon the hangar and other improvements, or any other equipment or property associated with the hangar. The lease shall require the tenant to accept full responsibility for payment of such taxes and to indemnify the City for any such payment. Cox Field Airport Page 3 Lease Policy XIII. INSURANCE The master lease agreement shall include provisions requiring the tenant to maintain during the life of the lease general liability, casualty, fire, and loss insurance covering both the hangar and the contents. All costs of such insurance shall be borne by the tenant. The level of coverage for the hangar shall be in an amount sufficient to pay the cost of construction of the hangar should the hangar be totally destroyed. The City shall be named as co-insured on all such insurance coverage. During construction of the hangar, the. tenant shall maintain appropriate construction insurance as likewise specified in the master lease agreement. Failure to maintain proper insurance coverage at any time during the term of the lease shall constitute a breach thereof and subject the tenant to all appropriate remedies for said breach. In addition to being named as co-insured, each insurance contract shall require the insurer to notify the City thirty (30) days in advance of any cancellation or lapse of coverage. XIV. MASTER LEASE AGREEMENT The City's master lease agreement, a copy of which is attached hereto and for all purposes incorporated herein, shall provide the frameworkfor lease agreements between future private hangar tenants and the City. The master lease agreement may be revised or amended only with the approval of the City Council. Cox Field Airport Page 4 Lease Policy MASTER LEASE AGREEMENT STATE OF TEXAS ) ) ) KNOW ALL MEN BY THESE PRESENTS: COUNTY OF LAMAR THIS LEASE AGREEMENT is made this [] day of [], 20[], by and between the CITY OF PARIS, PARIS, TEXAS, a municipal corporation, acting by and through its City Manager, Michael E. Malone, duly authorized, hereinafterreferred to as LESSOR, and [NAME], [ADDRESS], [CITY], [COUNTY] County, Texas, hereinafter referred to as LESSEE. WITNESSETH For and in consideration of the construction of a hangar and the payment of the monthly ground lease payment, due on or before the 1 st day of each month, to the LESSOR, and each month thereafter, as follows: $[] per month, said LESSOR does lease, rent, and let unto LESSEE that portion of Cox Field property described in Exhibit "A," attached hereto and made a part hereof for all legal purposes, hereinafter referred to as the property or leased premises. The first such monthly payment shall be due and payable on or before the first day of [], 20[], with successive monthly payments being due and payable on the first day of each month thereafter during the term hereof. LESSEE hereby leases the leased premises from LESSOR subject to the terms, covenants and conditions stated below, and shall have the right and privilege to construct and maintain certain improvements as described herein on the leased premises. LESSEE has inspected the leased premises and accepts it in its present (as-is) condition unless expressly noted otherwise in this Lease. LESSOR and any agent have made no express or implied warranties as to the condition or permitted use ofthe leased premises. LESSEE must satisfy itself that the leased premises may be used as LESSEE intends by independently investigating all Master Lease Aereement - page 1 EXHIBIT A I matters related to the use of the leased premises. LESSEE agrees that it is not relying on any warranty or representation made by LESSOR concerning the use of the leased premises. LESSOR shall deliver possession ofthe leased premises to LESSEE as ofthe effective date hereof. LESSEE shall be responsible for maintenance and insurance of the leased premises upon delivery of possession to LESSEE. The term ofthis Lease is for [] years, beginning on the [] day of[], 2001, and ending on the [] day of [], []. The rent established herein shall be subj ect to increase every five (5) years, in [THE MONTH IN WHICH THE LEASE BEGINS] of each sixth year, in the percentage amount of increase in the Consumer Price Index for All Urban Consumers (CPI-U United States City Average [1982- 84=100%]) above the rate for January 2000, which shall be determined to equal 168.7. In determining the rate increase, the LESSOR shall, by or before March 1 of each fifth year, or as soon thereafter as reasonably possible, provide written notice to the LESSEE ofthe amount of the CPI increase (including appropriate documentation thereof) and the LESSOR's calculation of the new monthly rental based on said increase. Beginning with the monthly payment due the first of the month following receipt of LESSOR's notice, LESSEE shall pay the adjusted monthly rate as determined herein. If, for any reason, the CPI adjustment would result in a decrease in the monthly rental due, the previous rental shall remain in effect. In no event shall the monthly rental rate be decreased. At the end ofthe initial term as specified herein, the LESSOR shall solicit competitive prices for lease ofthe hangar upon such terms and conditions and for such lengths oftime as the LESSOR Master Lease Ae:reement - page 2 in its sole discretion shall determine. LESSOR's right to reject all bids and solicit new bids when LESSOR deems such action in LESSOR's best interest is hereby preserved. Based on the results of said solicitation for bids, the LESSOR shall determine that bid which represents the highest and best bid meeting all criteria established by the LESSOR for rental of the property. When the LESSOR has determined the successful bid, the LESSOR shall thereafter offer LESSEE the opportunity for thirty (30) days to lease the premises on the same terms and conditions as applicable to the designated successful bidder. The LESSEE shall, within the thirty (30) day offer period, provide notice to LESSOR in writing as to whether or not LESSEE desires to re-lease the facility on the basis of the successful bid. If the LESSEE declines to match the successful bid, or fails to respond within the designated thirty (30) day period, then the LESSOR may proceed in leasing the facility to the designated successful bidder, and the LESSOR's obligation to LESSEE under this right-of-first-refusal shall have been satisfied. IN CONSIDERATION HEREOF, it is mutually agreed by and between LESSOR and LESSEE as follows: 1. That LESSEE pay to LESSOR, or order, at the City Hall in the City of Paris, the agreed rental in advance, promptly and without neglect, default, and delay. In the event LESSOR fails to receive any payment within ten (10) days after the same is due, a late payment penalty equal to 10% of such payment shall be charged to LESSEE. In the event LESSEE shall become delinquent for more than thirty (30) days, this Lease may be terminated by LESSOR as further stated herein. 2. That this Lease is subject to all the terms, provisions, and conditions of the deed of conveyance of such premises from the United States of America to the City of Paris, recorded in Master Lease Ae:reement - page 3 Book 308, Page 287, Deed Records of Lamar County, Texas, to which reference is made for all purposes. 3. That LESSEE, LESSEE's successors or assigns, agree that, in the event facilities are constructed, maintained, or otherwise operated on the said property described in this Lease for a purpose for which a Department of Transportation program or activity is extended or for another purpose involving the provision of similar services or benefits, LESSEE shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office ofthe Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation- Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. 4. That LESSEE, LESSEE's successors and assigns, will complete a Federal Aviation Administration (FAA) Form 7460-1, "Notice of Proposed Construction or Alteration," and receive a favorable determination from the FAA prior to any construction on the property. 5. That LESSEE, LESSEE's successors or assigns, agree that (i) no person, on the grounds of race, color, creed, sex, age, national origin, or disability shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities; (ii) that, in the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person, on the grounds of race, color, creed, sex, age, national origin, or disability shall be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination; (iii) that the LESSEE shall use the leased premises in compliance with all otherrequirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally- Master Lease Ae:reement - page 4 Assisted Programs ofthe Department of Transportation-Effectuation of Title VI ofthe Civil Rights Act of 1964, and as said Regulations may be amended. In the event of breach of any of the preceding nondiscrimination covenants, LESSOR shall have the right to terminate this Lease and any aeronautical permits, and to re-enter and repossess said land and the facilities thereon, and hold the same as if said Lease had never been made or issued. 6. That LESSEE shall comply with all conditions and requirements established in Department of Transportation, Federal Aviation Administration, Grant Agreements No. 8-48-0169- 02 and No. 6-48-0169-03. 7. That LESSEE will abide by and comply with all rules, regulations, ordinances, and laws pertaining to the use ofthe Airport located at Cox Field, including but not limited to the City of Paris Airport Manual and F ederal Aviation Administration rules and regulations pertaining to Cox Field, and in addition thereto will abide by and comply with all ordinances of the City of Paris and all laws ofthe State of Texas governing citizens and property within the City of Paris. 8. That LESSEE will use such leased premises only for the construction and maintenance of a private hangar and aeronautical activities for which LESSEE holds a permit issued by the City of Paris in accordance with Article II of Chapter 6 of the Code of Ordinances ofthe City of Paris. This Lease does not constitute the issuance of any such permit. The LESSOR and LESSEE recognize and agree this Lease shall be subject to such regulations and approvals as required by the FAA and TxDOT Aviation and in particular those FAA regulations which provide that the property subject to this Lease shall be used for Airport purposes and in such a manner so as not to materially and adversely affect the development and improvement, operation or maintenance ofthe Airport; and to the requirements of national emergency. LESSEE Master Lease Ae:reement - page 5 agrees to cooperate and assist LESSOR in complying with such regulations and conditions of approval. All runways and Airport facilities shall be open to the general traveling public for the landing and operation of aircraft therefrom without hindrance or interference on the part of LESSEE. No hangar constructed on the leased premises governed by this Lease shall be used as a residence or for residential purposes. However, such items as a sink, bathroom, or associated facility to allow temporary overnight stay or perhaps occasional social uses of a portion of the hangar will be permitted. 9. That LESSEE shall build, at LESSEE's own expense, a hangar building of a minimum internal size of _ square feet, along with accompanying apron and appropriate taxi lane, if necessary, in pursuit of such permitted uses as specified herein, upon application and approval for building permit or permits from the City of Paris, of all steel construction, similar in appearance and construction to the existing enclosed hangars and in accordance with the floor plan described in Exhibit "B," attached hereto and made a part hereof for all legal purposes, and in conformance with the rules or regulations of the City of Paris or the Federal Aviation Administration. LESSEE agrees to construct all buildings, ramps, and facilities (as more fully described in Exhibit "C"), within eighteen (18) months after the effective date of this Lease. Prior to construction ofthe improvements, the LESSEE shall obtain the LESSOR's written approval ofthe plans and specifications for such construction. The preliminary submission by the LESSEE shall employ essentials of aesthetics, convenience, function and design, and shall be compatible in such respect with those of the Airport. Upon approval of such preliminary plans, LESSEE shall prepare complete plans and specifications for the proposed construction. A Master Lease Ae:reement - page 6 construction application and final plans and specifications, when rendered, shall be submitted to the LESSOR for approval. The LESSEE shall include in all construction contracts entered into by it, in connection with any or all of the construction work, a provision requiring all contractors to indemnify, hold harmless, defend and insure LESSOR, its officers, agents, and employees, against the risk of death, injury, or damage to persons or property, direct or consequential, arising out of or in connection with the performance of any or all of such construction work. The LESSEE shall require all contractors to furnish liability insurance in such reasonable amounts as may be required by the LESSOR. In the alternative, the LESSEE itself may provide the indemnity and liability insurance otherwise required of contractors. All plans and specifications referred to above and all construction, renovation, remodeling, or refurbishing to or upon the leased premises shall meet all current codes required by the LESSOR and shall provide for the construction to be from material satisfactory and acceptable to the LESSOR. During the progress of all work, LESSOR's duly authorized representative may enter upon the leased premises and make such inspections as may be reasonably necessary for the purpose of satisfying LESSOR that the work or construction meets such requirements and standards. The LESSEE further covenants that all construction work to be performed by it or its contractors, including all workmanship or materials shall be of first class quality and shall be performed in accordance with the plans and specifications approved by the LESSOR. LESSEE agrees that it shall deliver to the LESSOR "as built" transparencies ofthe improvements constructed by it and shall, during the term of this Lease keep such transparencies, if any, current, showing thereon any changes or modifications which may be made in or to the improvements. LESSEE shall also provide a detailed cost summary of the costs incurred in constructing the hangar. Master Lease Aereement - page 7 The requirements stated herein for construction of the improvements shall likewise apply to any improvements or alterations to the original structure approved by LESSOR. In the event that LESSEE fails to comply with the provisions of this section of this Lease, the LESSOR may, in addition to any other remedies available to it, terminate this Lease. 10. That ownership of the hangar building, apron, and other associated improvements and/or alterations authorized by and constructed pursuant to this Lease shall revert to LESSOR (at no cost) upon expiration of the original term ofthe Lease. 11. That LESSEE may install in or upon the leased premises all such machines, tools, equipment, or other items of personal property as necessary in connection with the activities authorized in this Lease. All personal property belonging to LESSEE located on the leased premises and/or in the improvements located thereon shall be there at the sole risk ofthe LESSEE. LESSOR shall have no liability or responsibility for any theft, misappropriation, or damage to any personal property belonging to the LESSEE, any subtenant, or customer of the LESSEE. The LESSEE shall be entitled during the term ofthis Lease to remove from the leased premises, or any part thereof, all aircraft, tools, machinery, equipment, and non-structural improvements located thereon; provided, however, that all buildings from which any property is so removed shall be restored by LESSEE in such a manner that the buildings are not materially damaged (i.e., restored to same condition that existed before installation or placement of the property) and that those items removed are not required in order for the structure to be utilized as a hangar. LESSEE shall remove all equipment, fixtures, and systems (as specified in this Lease) upon termination or expiration of this Lease. If LESSEE fails to remove such property from the leased premises upon termination or expiration of this Lease, then LESSOR retains the right to remove or have removed at the expense of LESSEE all Master Lease Ae:reement - page 8 equipment, fixtures, and systems, and LESSEE agrees to pay LESSOR for such expense within fifteen (15) days after receipt of an invoice from LESSOR. 12. That, except as otherwise provided herein, LESSEE will use the leased premises only for aviation purposes, and administrative offices, and in any lawful manner necessary or incidental to the conduct thereof. LESSOR hereby grants, assigns, and conveys to LESSEE reasonable non-exclusive, non- discriminatory use, as defined by the FAA, ofthe runways, landing and taxiing ways, and common use portions ofthe Airport and related facilities at all times, subject, however, to the right of others entitled to use thereof. The LESSEE shall pay reasonable and customary fees, if any, for the use of such portions of the Airport. The LESSOR reserves for the use and benefit of the public a right of flight for the passage of aircraft in the airspace over the leased premises and for such noise as may be inherent in the operation of aircraft in said airspace, and for landing on, taking off from or operating on the Airport. 13. That LESSEE agrees not to make any additions or modifications to the leased premises unless agreed upon by both parties in writing. In the event of such consent, all improvements or modifications shall be made at the expense of LESSEE and, at the expiration of this Lease, shall become the property of LESSOR. LESSEE agrees that the usage of the leased premises plus any associated apron shall be limited to the parking of LESSEE's personal/company/customer owned aircraft. All automobiles, buses, trucks, or other transportation modes must be parked or stored in approved automobile parking areas and/or inside any hangar, unless agreed upon by LESSOR in writing. Master Lease A2reement - page 9 LESSEE agrees not to fuel or defuel any aircraft parked inside any hangar. LESSEE agrees to have a sufficient number of fire extinguishers of acceptable size as determined by the local fire marshal inside any hangar/office. Such fire extinguisher(s) shall be readily accessible in the event of a fire. The local fire marshal or his designated representative reserves the right to periodically inspect such fire extinguishers and the facility for fire safety compliance. LESSEE agrees that it will not operate any nonaviation-related business or activity on the leased premises. LESSEE agrees that, during the final one hundred eighty (180) days of the term hereof, LESSOR and LESSOR's authorized representatives shall have the right to erect and maintain on or about the leased premises customary signs advertising the leased premises for lease or for sale. 14. That LESSEE agrees at all times to comply with the following: (I) LESSEE shall at no time use, or permit the use of, the leased premises in a manner that is contrary to applicable federal, state, or local laws, ordinances, rules, or regulations, which shall include, but not be limited to, applicable Federal Aviation Administration rules and regulations and applicable regulations for the use ofthe Airport as may from time to time be promulgated by the LESSOR; (2) LESSEE shall not permit any permanent, unshielded light or illumination source to cause glare as viewed from any street, adjacent properties, or operating aircraft; (3) LESSEE shall not cause or permit the burial on the leased premises of any hazardous waste or materials, as defined by Federal or State law; (4) LESSEE shall not cause or permit any use or activity on the leased premises which would create a hazardous condition for aircraft operating at the Airport; (5) LESSEE shall not allow the leased premises to be used for parking of motor vehicles, motorcycles, or motor driven equipment by anyone other than customers, employees, or contractors of LESSEE except as may be authorized by Master Lease Al!:reement - page 10 the Airport Director, with all such parking being limited to areas designated by LESSOR for such parking; LESSEE shall not be in default for the improper parking of vehicles over which neither LESSEE nor any of its subtenants, customers, employees, or contractors have any control; (6) LESSEE shall not allow scheduled airline passenger operations to be conducted on the leased premises; and (7) LESSEE shall not permit aircraft to access the leased premises from outside the Airport property such that such access would constitute a "through the fence" operation prohibited by contracts between LESSOR and the State of Texas or the United States of America. 15. That LESSEE will take good care ofthe leased premises and be responsible and make good to LESSOR all injuries and damages to the same caused by LESSEE or those under LESSEE and will deliver same to LESSOR at the expiration or termination ofthis Lease in as good condition as when completed, usual wear and tear alone excepted; and LESSEE will, upon the expiration of this Lease, peaceably yield up to LESSOR all and singular the premises and all future erections, additions, or repairs to or upon same, in good repair, including but not limited to the main hangar building, apron, storage building, and permanent installation of equipment, fixtures, and fences. 16. That LESSEE agrees that it will at all times keep the leased premises, including the inside and the outside of any facility, clean and free of trash, litter, tall grass, weeds, junked automobiles, and scrap parts. LESSEE shall abide by all applicable laws and rules of the Environmental Protection Agency, the Texas Natural Resources Conservation Commission, the Texas Department of Agriculture, the Texas Department of Transportation, any other public agency, and any local laws or ordinances concerning the use, storage, and disposal of hazardous chemicals, fuel, and/or oil. LESSEE further agrees to abide by the manufacturer's directions in regards to the use, storage, and disposal of all pesticides, herbicides, and other chemicals plus their containers used Master Lease Al!reement - page 11 at the Airport. Should LESSEE fail to keep the leased premises clean and free of hazards, LESSOR may, after thirty (30) days written notice, arrange for the clean-up of the littered or hazardous area. Such clean-up shall be charged to LESSEE and payable upon demand. Failure to render prompt payment for such clean-up is grounds for LESSOR to terminate this Lease. 17. That LESSEE, at LESSEE's own cost and expense, shall keep the interior and exterior (including all structural and non-structural) portions of the leased premises including, but not limited to, plumbing, heating, lighting, air conditioning, and any other systems in connection therewith and all other parts of the leased premises in good order and condition and will make all necessary repairs to the leased premises both ordinary and extraordinary, foreseen and unforeseen, and will make all necessary replacements oflike quality when beyond repair. This obligation shall extend to the land and all improvements located thereon. LESSEE shall be responsible for all cleaning, custodial and janitorial, and landscaping services and shall keep the leased premises in neat, safe, sanitary, orderly, and sightly condition and in good working order at all times and shall remove snow and ice therefrom. In the event LESSEE fails to comply with this paragraph, LESSOR may notify LESSEE in writing that such maintenance, repair, or cleaning shall be done, and in the event that LESSEE fails to correct the condition within thirty (30) days of LESSOR's written notice, LESSOR or its authorized designee may enter the leased premises and provide the necessary maintenance or repair services and LESSEE agrees to pay LESSOR such expenses within fifteen (15) days upon receipt of an invoice. This is not to be construed as a duty or obligation of LESSOR to make any repair or perform any work or cleaning which the LESSEE is required to make or perform. Master Lease Ae:reement - page 12 18. That LESSEE shall payor cause to be paid all charges for water, heat, gas, electricity, sewers, and all other utilities used on the leased premises throughout the term of this Lease, including any connection fees. 19. That it shall be lawful for LESSOR's designated representatives to enter upon and into the leased premises, and every part thereof, at all times for the purpose of inspecting and examining the condition thereof. 20. That it is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right forbidden by Section 308(a) of the Federal Aviation Act of 1958 or for aeronautical activities such as, but not limited to: a) charter operations. b) pilot training c) aircraft rental d) aerial photography e) crop dusting f) sale of aviation petroleum products g) air carrier operations h) aircraft sales and service incidental thereto i) any other activity which, because of its direct relationship to the operation of aircraft, can be regarded as an aeronautical activity. Accordingly, LESSOR reserves the right to grant to others the privilege to engage in (or conduct) anyone or all of the aeronautical activities permitted hereunder. 21. That LESSEE shall not erect, paint upon, attach, exhibit or display in, on, or about said leased premises any sign without the prior express written consent ofthe LESSOR's designated representative. 22. That LESSEE will not assign this Lease or sublet the leased premises or any part thereof without the express written consent of LESSOR, in writing, first had and obtained. Any assignee shall assume all rights, privileges, duties, and responsibilities contained in this Lease. Master Lease Ae:reement - page 13 23. That LESSEE shall during the term hereof maintain at LESSEE's sole cost and expense insurance relating to the leased premises as follows: (I) Insurance against loss or damage to improvements by fire, lightning, and other risks from time to time included under standard extended coverage policies, and sprinkler, vandalism, and malicious mischief in an amount not less than the full replacement value ofthe hangar; and (2) Hangar keeper's liability insurance providing for coverage in the following limits: $200,000.00 per aircraft and $400,000.00 per occurrence on property damage to aircraft in the care, custody, or control of LESSEE if the LESSEE does not own all the aircraft stored in LESSEE's hangar. 24. That LESSEE agrees to obtain and maintain construction liability insurance at all times when demolition, excavation, or construction work is in progress on the leased premises. This insurance shall be carried by insurance companies authorized to transact business in the state of Texas, selected by LESSEE and approved by LESSOR, and shall be paid for by LESSEE. This insurance shall have limits of not less than $100,000.00 for property damage and $250,000.00 for one person and $500,000.00 for one accident for personal injury and shall protect LESSOR and LESSEE, as well as any other person or persons LESSEE may designate, against all liability for injury or damage to any person or property in any way arising out of demolition, excavation, or construction work on the leased premises. 25. That LESSEE agrees to indemnify, save, keep and hold harmless LESSOR from and against any and all demands, debts, liabilities, suits, claims and causes of action of every kind and character whatsoever for damage or injuries to persons and/or property occurring on the leased premises resulting from LESSEE's, LESSEE's invitees, agents, servants or employee's use, and LESSOR shall not be liable to LESSEE, LESSEE's invitees, agents, servants, employees or visitors Master Lease Al!reement - page 14 due to the improvements located thereon, or hereafter constructed, or any other condition of the leased premises being improperly constructed, maintained or being or becoming out of repair; LESSEE hereby waives any defects therein and agrees to hold and save LESSOR harmless from all claims for any such damages or injuries, and LESSEE must, at all times during the term of this Lease, keep and maintain, in full force and effect, a policy or policies of insurance, providing at least $250,000.00 per person and $500,000.00 for any single occurrence for bodily injury or death and $100,000.00 for any single occurrence for injury to or destruction of property, indemnifying all persons for any and all damages, personal injuries or property damages sustained in or upon the leased premises of said leased property, or any part thereof, as the result of the negligence of LESSEE, LESSEE's invitees, agents, servants or employees, and shall pay all premiums due thereon when due. 26. That with regard to all insurance required under this Lease, it is expressly provided that such insurance policy or policies shall and must be written and issued by a reputable insurance company or companies, with LESSOR as an additional insured, subject to approval by the City Attorney of the City of Paris, and LESSEE or LESSEE's insurance carrier or carriers shall deliver a copy of any such policies to the City Clerk of the City of Paris, 150 1st Street S.E., Paris, Texas 75460, or furnish to said City Clerk a current letter or certificate from such company or companies, evidencing the fact that such insurance is in full force and effect at all times during this Lease, and any extension hereof, and specifically noting thereon that LESSOR is an additional insured. All such policies shall be written so that the LESSOR will be notified of cancellation or of any restrictive amendment of the policies at least thirty (30) days prior to the effective date of such cancellation or amendment. Notice shall be by certified mail, return receipt requested, addressed to the LESSOR Master Lease Aereement - page 15 atthe following address: City Clerk, City of Paris, P. O. Box 9037, Paris, Texas 75461-9037. That LESSEE agrees that if LESSEE does not keep all insurance required under this Lease in full force and effect, LESSOR may declare this Lease, and all rights and interest created by it, to be terminated. 27. That, in case of any damage to or destruction of the buildings, structures, and equipment on the leased premises, or any part thereof, LESSEE will promptly give written notice thereof to LESSOR, generally describing the nature and extent of such damage and/or destruction. In case of any damage to or destruction of the buildings, structures, and equipment on the leased premises, or any part thereof, LESSEE, whether or not the insurance proceeds, if any, payable on account of such damage and/or destruction shall be sufficient for such purpose, at LESSEE's sole cost, risk, and expense, will promptly commence and complete the restoration, repair, and replacement of said buildings, structures and equipment as nearly as possible to their value, condition, and character immediately prior to such damage and/or destruction, with such alterations in and additions thereto as may be approved in writing by LESSOR (hereinafter sometimes referred to as the "Restoration"). All insurance proceeds, if any, payable on account of such damage to or destruction of the buildings, structures, and equipment on the leased premises shall be held by LESSOR. LESSOR shall be protected in acting upon any certificate believed by LESSOR to be genuine and to have been executed by the proper party and shall receive such certificate as conclusive evidence of any fact or as to any matter therein set forth. Such certificate shall be full warranty, authority, and protection to LESSOR in acting thereon, and LESSOR shall be under no duty to take any action other than as set forth in this paragraph. Master Lease Ae:reement - page 16 Insurance proceeds received by LESSOR on account of any damage to or destruction of the buildings, structures, and equipment on the leased premises, or any part thereof (less the costs, fees, and expenses incurred by LESSOR and LESSEE in the collection thereof, including, without limitation, adjuster's and attorney's fees and expenses), shall be applied as follows: A. Net insurance proceeds as above defined shall be paid to LESSEE or as LESSEE may direct from time to time as Restoration progresses to pay (or reimburse LESSEE for) the cost of Restoration, upon written request of LESSEE to LESSOR accompanied by (1) certificate of a supervising architect or engineer approved by LESSOR, describing in reasonable detail the work and material in question and the cost thereof, stating that the same were necessary or appropriate to the Restoration and constitute a complete part thereof, and that no part of the cost thereof has theretofore been reimbursed, and specifying the additional amount, if any, necessary to complete the Restoration, and (2) an opinion of counsel satisfactory to LESSOR that there exist no mechanics', materialmen's, or similar liens for labor or materials except such, if any, as are discharged by the payment of the amount requested. B. Upon receipt by LESSOR of evidence of the character required by the foregoing clauses (A)(1) and (2) that Restoration has been completed and the cost thereof paid in full, and that there are no mechanics', materialmen's, or similar liens for labor or materials supplied in connection therewith, the balance, if any, of such proceeds shall be paid to LESSEE or as LESSEE may direct. In the event that LESSEE does not promptly commence Restoration, or after commencement LESSEE does not diligently proceed to the completion of same, LESSOR shall have the right to Master Lease Ae:reement - page 17 commence or complete Restoration after LESSOR has given LESSEE thirty (30) days prior written notice requesting the commencement of Restoration or that LESSEE diligently proceeds to the completion of same if LESSEE during such thirty (30) day period does not so commence or proceed to diligently complete Restoration. In such event, LESSOR shall retain the insurance proceeds, and LESSEE shall pay any deficiency if such proceeds are not sufficient for Restoration. 28. That LESSEE shall not rent the leased premises, or any part thereof, for aircraft storage unless a permit under Article II, Chapter 6 ofthe Code of Ordinances of the City of Paris, has been issued to LESSEE for that specific purpose. 29. That LESSOR has the right to take any action it considers necessary to protect the aerial approaches ofthe Airport against obstruction, together with the right to prevent LESSEE from erecting, or permitting to be erected, any building or other structure on the Airport which, in the opinion ofthe LESSOR, would limit the usefulness ofthe Airport or constitute a hazard to aircraft. 30. That LESSEE shall pay and discharge all taxes, including without limit sales, use, and excise taxes, ad valorem taxes, taxes on personal property, general and special assessments, and other charges of every description which are levied on or assessed against the leased premises and all interests in the leased premises and all improvements and other property on the leased premises during the term ofthis Lease, whether belonging to LESSOR or to LESSEE. LESSEE shall pay all such taxes, charges, and assessments directly to the public officer charged with their collection not less than fifteen (15) days before the same shall become delinquent. LESSEE shall at no time permit the foreclosure of any tax liens to LESSEE's leasehold interest in the leased premises or the buildings, fixtures, or other improvements on the leased premises. LESSEE shall have the right in good faith at its own sole cost and expense to contest any such taxes, charges, and assessments, and Master Lease A1!:reement - page 18 shall be obligated to pay the contested amount, plus any penalties and interest imposed, only if and when finally determined to be due. At any time that the payment of any item of taxes, special assessments, or governmental charges which LESSEE is obligated to pay under the provisions ofthis paragraph remain unpaid and uncontested later than fifteen (15) days before the same shall become delinquent, LESSOR may declare this LEASE, and all rights and interest created by it, to be terminated. 31. That nothing herein shall be deemed to relieve LESSEE and its tenants, sub lessees, patrons, invitees and others from Airport use charges, including fuel flowage fees paid on fuel purchased by LESSEE, as are levied generally by the LESSOR directly upon the operation of aircraft, or from automobile parking permit fees for parking areas that are not included within the leased premises, or from security fees. 32. That, if at any time a release of hazardous materials is discovered on, at, or in the leased premises, the Airport, the LESSOR's sewage or storm drainage system, soil, air, groundwater, or any improvements, which was caused or permitted by LESSEE, LESSEE's officers, agents, employees, contractors, permittees, invitees, or subtentants, or there is the danger of such release of hazardous materials, LESSEE, at LESSEE's sole cost and expense, shall ensure removal of such hazardous materials from the .leased premises, the Airport, the underlying groundwater, the LESSOR's soil, air, storm drainage, and the sewage system, in accordance with requirements of all appropriate governmental authorities. LESSEE shall immediately notify LESSOR of any release of hazardous materials. Upon discovery of any hazardous materials on, in, under, or emanating from the leased premises, any release or threat of release of a hazardous materials, and/or any illness caused by Master Lease A2reement - page 19 exposure thereto, LESSEE shall immediately, and at its sole cost and expense, take all actions necessary to remediate, abate, and/or rectify any such conditions at or upon the leased premises. 33. That LESSEE will not use, or permit the use of, said leased premises, or any part thereof, for any purpose which is determined dangerous or hazardous to the Airport operation by Airport Manager. 34. That the following events shall be deemed to be events of default by LESSEE under this Lease: A. Failure of LESSEE to pay any lease payment or any other sum payable to LESSOR hereunder on the date that same is due and such failure shall continue for a period of thirty (30) days. B. Failure of LESSEE to comply with any term, condition, or covenant of this Lease other than the lease payment or other sum of money, and such failure shall not be cured within thirty (30) days after written notice thereofto LESSEE. C. Insolvency, the making of a transfer in fraud of creditors, or the making of an assignment for the benefit of creditors by LESSEE or any guarantor of LESSEE's obligations. D. Filing of a petition under any section or chapter ofthe National Bankruptcy Act, as amended, or under any similar law or statute ofthe United States or any State thereof by LESSEE or any guarantor of LESSEE ' s obligations, or adjudication as a bankrupt or insolvent in proceedings filed against LESSEE or such guarantor. E. Appointment of a receiver or trustee for all or substantially all of the assets of LESSEE or any guarantor of LESSEE's obligations. Master Lease Al!reement - page 20 F. Abandonment by LESSEE of any substantial portion of the leased premises or cessation of use of the leased premises for the purposes leased. G. The filing of any lien against the leased premises resulting from any act or omission of LESSEE which is not discharged or contested in good faith as determined by LESSOR by proper legal proceedings within fifteen (15) days of receipt of actual notice by LESSEE, unless LESSEE posts a bond within this time period equal to the amount of the lien. In the event of any default by the LESSEE that is not cured within thirty (30) days of receiving notice from LESSOR, LESSOR may, in addition to any other remedies available to it, terminate this Lease. Ifthe default concerns a failure to make payments to LESSOR, however, no written or other notice of default shall be required. If payments to LESSOR are in arrears for a period ofthirty (30) days after the payments become due, then LESSEE shall be in default under this Lease. Notwithstanding the foregoing, no failure to perform or delay in performance which is caused by any war, civil disorder, or other national emergency or which is due to an intervening act of God shall be deemed an event of default. In addition to the termination and forfeiture right described in the preceding paragraph, LESSOR shall have the following rights and remedies upon default by LESSEE: A. The recovery of any unpaid rent, fees, and other payments due and owing at the time oftermination, plus any unpaid rent and fees that would have been earned and other payments that would have been made if the Lease had not been breached by LESSEE. Master Lease Ag:reement - page 21 B. The recovery of any damages, costs, fees, and expenses incurred by LESSOR as a result of the breach of the Lease by LESSEE, including reasonable attorneys' fees and expenses. C. The removal of all persons from the leased premises, and the removal and storage at LESSEE's expense of all property on the leased premises. D. Any other right or remedy, legal or equitable, that LESSOR is entitled to under applicable law. No termination shall relieve the LESSEE of the obligation to deliver and perform on all outstanding obligations and requirements prior to the effective date of the termination and LESSEE's liabilities under this Lease shall continue. In the event of any such termination as above enumerated, LESSOR shall have the right at once and without further notice to the LESSEE to enter and take full possession of the leased premises occupied by the LESSEE under this Lease. Upon the termination of this Lease for any reason, LESSEE shall yield up said leased premises, facilities, fixtures, and equipment to LESSOR in the same condition as when received, reasonable and ordinary wear and tear and damage by the elements excepted. In the event of the failure on the part ofthe LESSEE upon the termination of this Lease to immediately remove from the leased premises all property owned by it, LESSOR may effect such removal and store such property at LESSEE's expense. LESSEE further covenants and agrees to pay and discharge all reasonable costs, attorney's fees, and expenses that may be incurred by LESSOR in enforcing the covenants, conditions, and agreements ofthis Lease, re-entering andlorrepossessing the leased premises, restoring the leased premises to good and proper repair/order, protecting the Master Lease Al!reement - page 22 leased premises, and obtaining a new tenant. The failure of LESSOR to declare this Lease terminated for any of the reasons set out above shall not bar the right of LESSOR to subsequently terminate this Lease for any ofthe reasons set out above. Further, the acceptance of rents, fees, or other payments due and owing to LESSOR for any period after a default of any ofthe terms, covenants, or conditions by LESSEE shall not be deemed a waiver of any right on the part of LESSOR to terminate this Lease. 35. That the LESSOR has the right to temporarily close the Airport or any of the facilities thereon for maintenance, improvements, or for the safety of the public. 36. That the LESSOR may, at its option, terminate this Lease as to the land or the entire hangar building, or any parts thereof, which may be necessary in the event the LESSOR desires to use the property, or any portion thereof, for necessary municipal functions as determined by LESSOR, such as, but not limited to, extension of runways or erection of other Airport facilities. In the event ofthe above determination, the LESSOR shall give the LESSEE ninety (90) days notice, in writing, of its intention to so utilize the building, or any portion thereof, for such purposes. In the event this option is exercised by the LESSOR, LESSEE shall be paid, as LESSEE's sole consideration, the fair market value of improvements previously made by LESSEE to the leased premises and authorized by LESSOR, said fair market value to be determined as of the time the LESSOR exercises the right oftermination as provided in this paragraph. In no event shall LESSOR be liable for a claim of lost profits, lost benefit, or other similar claims as a result of termination under this paragraph. 37. That, during time of war or national emergency, LESSOR shall have the right to lease the landing areas or any part thereof to the United States Government for military or naval use, and, Master Lease Ae:reement - page 23 if such lease is executed, the provisions of this instrument, insofar as they are inconsistent with the provisions of the lease to the Government, shall be suspended. 38. That the waiver by LESSOR of any breach by LESSEE of the terms, covenants, conditions, or provisions ofthis Lease shall not be deemed to be a waiver of any other breach ofthe same or other term, covenant, condition, or provision of this Lease, regardless of when the breach has occurred. 39. That, in case anyone or more ofthe provisions contained in this Lease shall, for any reason, be held by a Court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of the Lease, and this Lease shall be construed as if the invalid, illegal, or unenforceable provision had never been included in the Lease. 40. That this Lease constitutes the sole and only agreement of the parties to this Lease and supercedes any prior understandings or written or oral agreements between the parties respecting the subject matter of this Lease. 41. That no amendment, modification, or alteration of the terms of this Lease shall be binding unless it is in writing, dated subsequent to the date ofthis Lease, and duly executed by the parties ofthis Lease. 42. That the rights and remedies provided by the Lease are cumulative, and the use of any one right or remedy by LESSOR shall not preclude or waive its right to use any or all other remedies. These rights and remedies are given in addition to any other rights the LESSOR may have by law, statute, ordinance, or otherwise. Master Lease Aereement - page 24 43. That all notices required under this Lease must be given by certified mail or registered mail, addressed to the proper party, at the following addresses: LESSOR City Manager City of Paris P. O. Box 9037 Paris, TX 75461-9037 LESSEE Either party may change the address to which notices are to be sent by giving the other party notice of the new address in the manner provided in this paragraph. 44. That this Lease shall be binding upon, and inure to the benefit of, the respective heirs, executors, administrators, legal representatives, successors, and assigns when permitted by this Lease. 45. Thatthis Lease shall be construed under, and in accordance with, the laws ofthe State of Texas, and all obligations ofthe parties created by this Lease are performable in Lamar County, Texas. Venue for State court actions arising under this Lease shall be exclusively in the courts of Lamar County, Texas; venue for federal court actions arising under this Lease shall be exclusively in the federal courts for the Eastern District of Texas. EXECUTED ON the dates shown in acknowledgments below. CITY OF PARIS, LESSOR: By: Michael E. Malone, City Manager ATTEST: Mattie Cunningham, City Clerk Master Lease Ae:reement - page 25 APPROVED AS TO FORM: Larry W. Schenk, City Attorney LESSEE Name: STATE OF TEXAS ) ) COUNTY OF LAMAR ) BEFORE ME, the undersigned authority, on this day personally appeared MICHAEL E. MALONE, City Manager of the City of Paris, Paris, Texas, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this the _ day of [], 2001. Notary Public, State of Texas STATE OF TEXAS ) ) COUNTY OF LAMAR ) BEFORE ME, the undersigned authority, on this day personally appeared [], known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE this the _ day of [], 2001. Notary Public, State of Texas Master Lease Al!reement - page 26